Tech News & Commentary

FTC docks Apple for acting like Soupy Sales

The Federal Trade Commission on Wednesday said Apple (AAPL) has agreed to refund at least $32.5 million to consumers to settle an FTC complaint over a business practice that sounds a lot like a stunt pulled by late great comedian Soupy Sales.

Apple billed consumers for millions of dollars in charges incurred by children in kids' mobile apps without their parents' consent. Apple agreed to pay full refunds to consumers and to change its billing practices to ensure that it has obtained express, informed consent from consumers before charging them for items sold in mobile apps.

"This settlement is a victory for consumers harmed by Apple's unfair billing," FTC Chairwoman Edith Ramirez said in a statement. "You cannot charge consumers for purchases they did not authorize."

The Federal Trade Commission ordered Apple to refund at least $32.5 million to consumers for a business practice reminiscent of a stunt by late great... View Enlarged Image

Apple offers many games and kids' apps in its App Store that allow users to incur charges within the apps. Many of these charges are for virtual items or currency used in playing a game. The charges can range from 99 cents to $99.99 per in-app charge, the FTC said.

The FTC complaint alleges that Apple does not inform account holders that entering their password will open a 15-minute window in which children can incur unlimited charges with no further action from the account holder. Plus, Apple often presented a screen with a prompt for a parent to enter his or her password in a kids' app without explaining to the account holder that password entry would finalize a purchase.

Apple received tens of thousands of complaints about unauthorized in-app purchases by children, the FTC said. One consumer said her daughter spent $2,600 in the app "Tap Pet Hotel," and other consumers reported unauthorized purchases by children totaling more than $500 in the apps "Dragon Story" and "Tiny Zoo Friends." According to the FTC complaint, consumers have reported millions of dollars in unauthorized charges to Apple.

So how is Apple's behavior like a famous Soupy Sales stunt?

On Jan. 1, 1965, Sales ended the live broadcast of his children's TV show by encouraging his young viewers to tiptoe into their parents' bedrooms and remove those "funny green pieces of paper" from their wallets and purses. "Put them in an envelope and mail them to me," Soupy instructed the kids. "And I'll send you a postcard from Puerto Rico!"

It was a joke, but a lot of impressionable kids listened and sent money to Soupy. Parents were outraged and the TV station suspended him for two weeks. The cash the show received in the stunt was donated to charity. (For more on the Soupy Sales New Year's Day incident, check out the accounts on Snopes.com and the New York Times .)

As Apple and Soupy Sales learned, kids don't understand the value of money.

The Federal Trade Commission on Wednesday said Apple (AAPL) has agreed to refund at least $32.5 million to consumers to settle an FTC complaint over a business practice that sounds a lot like a stunt pulled by late great comedian Soupy Sales.

Apple billed consumers for millions of dollars in charges incurred by children in kids' mobile apps without their parents' consent. Apple agreed to pay full refunds to consumers and to change its billing practices to ensure that it has obtained express, informed consent from consumers before charging them for items sold in mobile apps.

"This settlement is a victory for consumers harmed by Apple's unfair billing," FTC Chairwoman Edith Ramirez said in a statement. "You cannot charge consumers for purchases they did not authorize."

The Federal Trade Commission ordered Apple to refund at least $32.5 million to consumers for a business practice reminiscent of a stunt by late great... View Enlarged Image

Apple offers many games and kids' apps in its App Store that allow users to incur charges within the apps. Many of these charges are for virtual items or currency used in playing a game. The charges can range from 99 cents to $99.99 per in-app charge, the FTC said.

The FTC complaint alleges that Apple does not inform account holders that entering their password will open a 15-minute window in which children can incur unlimited charges with no further action from the account holder. Plus, Apple often presented a screen with a prompt for a parent to enter his or her password in a kids' app without explaining to the account holder that password entry would finalize a purchase.

Apple received tens of thousands of complaints about unauthorized in-app purchases by children, the FTC said. One consumer said her daughter spent $2,600 in the app "Tap Pet Hotel," and other consumers reported unauthorized purchases by children totaling more than $500 in the apps "Dragon Story" and "Tiny Zoo Friends." According to the FTC complaint, consumers have reported millions of dollars in unauthorized charges to Apple.

So how is Apple's behavior like a famous Soupy Sales stunt?

On Jan. 1, 1965, Sales ended the live broadcast of his children's TV show by encouraging his young viewers to tiptoe into their parents' bedrooms and remove those "funny green pieces of paper" from their wallets and purses. "Put them in an envelope and mail them to me," Soupy instructed the kids. "And I'll send you a postcard from Puerto Rico!"

It was a joke, but a lot of impressionable kids listened and sent money to Soupy. Parents were outraged and the TV station suspended him for two weeks. The cash the show received in the stunt was donated to charity. (For more on the Soupy Sales New Year's Day incident, check out the accounts on Snopes.com and the New York Times .)

As Apple and Soupy Sales learned, kids don't understand the value of money.

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